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You tell me. When oil was racing to $150 a barrel where was the actual shortage?

As was pointed out by the OP we get almost nothing from Libya. So why then should any worry about their production cause our price to go up? Speculation on the world market sets the price.

Are you suggesting the US oil producers won't follow the market price? That say Exxon is going to get patriotic and sell oil from a well in Texas to the refinery for $50 a barrel even if the market price is $100 a barrel.

Being self sufficient would guarantee the supply not the price.

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Once again you are trying to use a supply and demand model to make your point. That has no bearing when the price is being driven more by speculation.

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If we produced every drop of oil we used how much do you think that would actually contribute to the world price? Do you not believe the oil producing nations would curtail production to keep the price higher. Certainly your not going to suggest they've never done that?

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The whole idea that "drill baby drill" is gonna provide us with cheap abundant oil is a myth. Much of the reserves we find and want to tap here involve oil which is not easy to get to and expensive to extract. Which in turn requires higher prices to make it profitable.

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ORIGINAL: Marc2b

Supply and demand affect speculation. How could it not?

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ORIGINAL: flcouple2009

Once again you are trying to use a supply and demand model to make your point.  That has no bearing when the price is being driven more by speculation.

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ORIGINAL: DomYngBlk

Wait, I thought you were all for free market capitalism.....Oh, I get it...for it only when it works in your favor....Typical

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ORIGINAL: flcouple2009

Welcome back wilbur.  I see you still have the comedy routine.

Shouldn't be your nic be Clueless in Fantasy Island?

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ORIGINAL: willbeurdaddy



"It's very hard to claim there was a jump in inventories driven by net long positions, which drove a jump in prices," said Christof Ruhl, chief economist at U.K. oil and gas giant BP PLC (BP), which also runs a large derivatives trading desk.

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ORIGINAL: Aneirin

Just out of interest, of the price you pay at the pump, how much of that cost is tax, has your tax increased, or is the increased cost purely down to the oil companies and their sellers ?

The reason I ask, is we in the UK know despite the increase in the cost of a barrel of oil, we are also getting screwed over by our government in the form of fuel duty and value added tax. The tax being the larger part of the cost we pay at the pump.
The breakdown as of August 2007 is; Forecourt - 5%, Oil cost - 32%, Taxation - 63%. Every government budget, they hike the tax on gas, and not only vehicle gas, but heating oil as well. We know our government is fucking us over and we know they never commit to their electioneering promises, that is why we don't trust them.

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Not nearly as much as the lack of regulation in the futures market affects it.

Fix that, and 90% of the problem goes away overnight. None of the others (drilling more, green fads, etc) kill 90% of the problem in one swoop.

But then again, what would all the people who gave up owning a business (and hiring people) in the real world to gamble in the commodities casino do for a living?

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ORIGINAL: willbeurdaddy

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ORIGINAL: flcouple2009

Once again you are trying to use a supply and demand model to make your point.  That has no bearing when the price is being driven more by speculation.

You are clueless about the futures markets and how they impact delivered prices. Hint: Ulimately they dont much at all.

The money pouring in to commodity index funds over the last decade is often blamed for the sharp rise in commodity prices, culminating in the record-setting prices hit in the summer of 2008. These funds typically invest in futures contracts, betting that the prices will rise.

But skeptics note that if speculation had a major impact on, for example, spot oil prices, inventories would have increased as producers hoarded oil for sale at future dates.

Instead, oil inventories fell to historically low levels in the first half of 2008.

"It's very hard to claim there was a jump in inventories driven by net long positions, which drove a jump in prices," said Christof Ruhl, chief economist at U.K. oil and gas giant BP PLC (BP), which also runs a large derivatives trading desk.

Instead, he said, oil prices are mainly driven by market fundamentals: voracious demand from Asia, mainly China; economic growth in developed countries; and production decisions by the Organization of Petroleum Exporting Countries.

"It's a market driven by demand, supply and a cartel," Ruhl said.